In this story the chief value of the Tool himself is that he has no value. He made his statements against us to Mr. Dorr, assistant U.S. district attorney. Then he gave me a statement, signed in the presence of witnesses, recanting the statements made to Mr. Dorr. To this he later added a written postscript enforcing his recantation. Then he re-recanted and said that a large part of his first recantation, signed by him and initialed by him on each page with his initials was false. The reader is left to judge just which one of the Tool's three positions is the one in which he tells the truth. It is obvious that he must be lying in the two others, and it is not impossible that he may be lying in all three—except that some of the stuff in his first recantation, which he later denies in his second, has been verified from other sources.
Here is the main point to bear in mind concerning the Tool,—the sovereign power of seizure, search and confiscation brought into play by our great Government without due process of law, was based in part on the flimsy testimony of such a person. Thousands of investors suffered from the blow, as well as myself and associates.
It would appear from the Roach statement that he was largely instrumental in bringing about the crisis that resulted in the suspension of the Simmonds firm and in the disclosures of the Special Agent's relations therewith. These facts have become, in most instances, matters of public record. They came out during the hearings before the receiver for the bankrupt concern. It was found that the liabilities of the "busted" firm were $85,000 and the assets 100 shares of cheap mining stock and between $1,500 and $2,000 in cash. It was at this conjunction that the Special Agent was allowed to resign from the Department of Justice. The Tool he had foolishly used had proved to be a two-edged one. The Agent had been "hoist by his own petard."
THE GUGGENHEIMS
Probably the most surprised branch of the Government at the time of the Scheftels raid was the Post-Office Department. The crime charged was misuse of the mails. Why, if the Scheftels aggregation were guilty, didn't the Post-Office Department do the raiding? Why didn't it issue a fraud order? The Scheftels company has since been declared solvent by the courts and the temporary receiver discharged. To this day no fraud order has been issued. Only a short period before the raid, a presentation on the part of the Post-Office Department of all of the evidence in the case had been met with a decision that there was no ground for action.
That the Guggenheim interests did not fail to take advantage of the plight of the House of Scheftels immediately after the raid finds conclusive proof in the transpirations in the Ely mining camp. Soon after the Special Agent descended on the Scheftels offices, an application in Ely was made for a receiver to take charge of the assets of the Ely Central Copper Company. The attorneys making the application were Chandler & Quale, attorneys for the Nevada Consolidated Copper Company, a Guggenheim enterprise. When the court appointed a receiver he named this firm as attorneys for the receiver. Attorney J. M. Lockhart for the Ely Central made a protest that these lawyers, because of their connection with the Nevada Consolidated were not the proper persons to protect the interests of the now defenseless Ely Central stockholders. Then the court appointed another attorney, named Boreman.
Shortly after the receiver was appointed, he applied to the courts for permission to sell to the Nevada Consolidated for $30,000, which represented the entire cash indebtedness so far as the receiver knew, the surface rights to a large acreage of Ely Central and the rights through Juniper Canyon. This, if accomplished, would have given to the Nevada Consolidated a railroad right of way that would have solved the problem confronting it of the transportation of the ores from the lower levels of the steam-shovel pit. Without such an outlet these ores could not have been handled without great expense and much difficulty. The benefits that would have accrued to Nevada Consolidated were almost incalculable. At the same time, such action would effectually cut the Ely Central property into two parts. According to the petition it was stipulated that in selling the surface rights the Ely Central should cede to the Nevada Consolidated practical ownership, because it was specified that Ely Central could not interfere in its mining operations with any rights granted. Attorney Lockhart of Ely Central fought the receiver and his attorneys and won a victory. The Ely Central property was saved intact for the stock-holders.
Later, an application was made to the court to sell the entire property of the Ely Central for $150,000. This was believed to be in the interests of the Nevada Consolidated. In answer, a petition was filed to discharge the receiver on the ground that the court originally appointing him had no jurisdiction. The court finally decided that it was without jurisdiction, because neither fraud nor incompetency had been proved, and the property had not been abandoned. The receiver was discharged.
What has been the attitude of the Department of Justice since the raid was made? Since the raid the Government has spent several hundred thousand dollars to disclose sufficient evidence from the books to make a case of any kind. One stand after another has been taken only to be abandoned after exhaustive research for evidence to sustain the original excessive pretenses. Grand Jury after Grand Jury has thrashed over masses of evidence presented them. Armies of accountants have worked day and night for weeks and months in an effort to substantiate the action of the authorities who were led into the commission of a grave wrong.
The charge that the Scheftels corporation sold fake mining stocks has fallen to the ground. Government examinations of the properties have revealed them to be all that they were cracked up to be. Careful and industrious reading of the mass of market literature sent through the mails by the Scheftels corporation has failed to disclose deliberate misrepresentation regarding the potentialities of any of the mining properties.